On 3 December 2016, the Governments of Morocco and Nigeria signed a bilateral investment treaty (BIT) that deserves close scrutiny. The treaty is an important attempt by two developing countries to move toward a new generation of BITs fully aligned with the evolution of international law. Indeed, it contains several largely innovative provisions susceptible to address the criticism raised in the last few years against investment treaties.
From popularity to hostility
Investment treaties, and especially BITs, were popular in the 1990s and 2000s. Their number grew quite spectacularly as did the participation of developing countries. In the last few years, however, BITs have been increasingly perceived by States as inconvenient for several reasons, including unbalanced content, restrictions on regulatory powers, and inadequacies of investment arbitration.
Dissatisfaction with traditional BITs has generated four main types of reaction: (a) reluctance to ratify BITs. Since 2012, only 25 BITs have entered into force (see here); (b) conclusion of facilitation agreements, which radically downgrade the substantive protection of foreign investment and do not provide for arbitration (see, eg, Treaty between Brazil and Mozambique); (c) termination of BITs and adoption of investment legislation (see South Africa Protection of Investment Act, 2015); and (d) upgrading of BITs with a view to striking a better balance between the private and public interests at stake. The BIT concluded – but not in force yet – between Morocco and Nigeria is a fine example of the last typology. Read the rest of this entry…